Bitcoin: Bit part or principal player?

Ahead of the Scottish Bitcoin Conference on Saturday and on the back of our recent and very excellent guest blog by the conference organiser Dug Campbell, I thought I would look at how the time-stamping capability of the Bitcoin technology sits within our current legal framework.

Whatcoin?

I shall simply link to Dug’s blog for an expert’s explanation of what Bitcoin is, but this layman’s basic understanding is as follows. Bitcoin is just the currency side, the core technology is known as the blockchain, which is effectively a public database or ledger which using public key encryption technology (amongst other things) allows a document, file, transaction data or other information to be time stamped and survive as a permanent and completely un-editable record of its submission.

The Bitcoin currency may have grabbed all the headlines (good, bad and misleading), but the technology has much wider application. For example, an Israeli start up recently announced plans to store genetic and medical record data using block chain technology. There are also a number of services appearing using the blockchain to provide time-stamp document integrity services, for example www.proofofexistence.com and it is this type of service which perhaps has most relevance for the legal world.

Prove it

Proving the date of a document can be a crucial element of a legal dispute or in the process of creating legal (and particularly intellectual property) rights. For example, historically songwriters and composers would post their completed sheet music to themselves and keep the unopened envelope as proof (courtesy of the postmark date) of its existence and age. This would be their evidence if they needed to defend or pursue a claim of copyright infringement. What the blockchain now provides is the most up to date technical equivalent of that approach.

Question of proof

One beta timestamping service which was launched recently states that “we don’t know if it’ll stand up in court” when referring to its service.

I find that there is a good deal of misunderstanding and misconception about the use of technology in legal documents and legal proceedings. One of my earliest posts on this blog looked at a case which confirmed that an email is a valid form of writing. This case was not ‘new law’ but was widely reported as it confirmed a point that was not well understood.

The Electronic Communications Act 2000 and the Electronic Signatures Regulations 2002 brought onto the statute books much that was already part of our existing law. Electronic communications and signatures were now not to be prejudiced simply because of their electronic form. However, we already had a tradition of ‘function over form’ when it came to the use of new technologies. My favourite example being a Scottish criminal appeal case where a drug dealer tried to argue that his PalmPilot (remember those) which contained detailed records of all his drug deals was not a ‘document’ and was not therefore admissible in evidence. The court disagreed and rightly pointed out it was simply a modern form of document.

No prejudice

The same approach should apply to blockchain timestamp services. The fact that the proof of the integrity and age of a document will come in the form of highly technical evidence about the blockchain technology should not invalidate it in any way. It is not any more or less valid than any other forms of evidence because of the form it takes. Of course how much weight is attached to the evidence is a matter for the court to decide. But as with electronic signature technology which can confirm the authenticity and integrity of a document to a far higher degree than traditional handwritten methods, it should provide extremely compelling evidence.

As Dug alludes to in his blog, there are many myths around Bitcoin. However there are clear signs that the technology behind it is not a passing trend but instead a compelling and disruptive technology that can affect services beyond currency and document integrity. I look forward to learning more about these and other issues at the Scottish Bitcoin Conference. Roll on Saturday.

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